A new NBER paper argues that food stamps lead people to work less, especially single family parents:
Labor supply theory makes strong predictions about how the introduction of a social welfare program impacts work effort…. We use the cross-county introduction of the program in the 1960s and 1970s to estimate the impact of the program on the extensive and intensive margins of labor supply, earnings, and family cash income. Consistent with theory, we find modest reductions in employment and hours worked when food stamps are introduced. The results are larger for single-parent families.
This is not to say by any means that food stamps are not still a desirable program, but it is always worth thinking about how you can improve or replace existing welfare programs to better align incentives. This is a reminder that food stamps are not without their potential problems.
Of course, one could see single parents being able to spend more time with their kids as a benefit of this, in fact one might see positive impacts on grades and other outcomes via this mechanism. In either case, it’s important to know that food stamps affect work incentives.
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Monday ~ July 19th, 2010 at 10:21 am
Edwin Perello
Does the study differentiate between incentive to work less and the likelihood people who would be eligible for food stamps simply work less due to the nature of their economic circumstances? I’d hold the causality to scrutiny.
Monday ~ July 19th, 2010 at 10:23 am
Rebecca Burlingame
The only reason this program still exists appears to be out of concern for the children, as adults with no children at home often receive too little aid to actually make it worthwhile for the bookkeeping.
Monday ~ July 19th, 2010 at 1:30 pm
rjs
bring it up again when we have a labor shortage…
Sunday ~ August 1st, 2010 at 10:07 pm
Myrisa
You should come see what food stamps have done in Puerto Rico. It is an incentive for young girls to have children they can’t support and do not know to raise well. An incentive not to marry the father(s) of their children lest they lose this and other welfare “benefits”, like rent subsidies. A subsidy for employers paying low wages at the expense of the federal tax payer. (Residents of the island do not pay federal income taxes.) It´s a disincentive for price competition among distributors and retailers. It´s also a source of corruption for the local government bureaucracy.